Next Big F-35 Contract Expected Later This Year

The U.S. Defense Department is expected to award the next big F-35 contract before the end of the year, marking three such deals in roughly a 12-month span, the head of Lockheed Martin Corp. said Tuesday.

Marillyn A. Hewson, chief executive officer of the plane's manufacturer, said she's optimistic her company and the Pentagon will strike a deal on the next low rate initial production, or LRIP, agreement as the number of Joint Strike Fighters coming off the line is "ramping up."

"We will continue to see cost reductions just through volume," she said on Tuesday during a daylong briefing with reporters at the company's offices in Arlington, Virginia, outside Washington, D.C.

Hewson said President Donald Trump, who has publicly criticized the cost of the program -- the Pentagon's most expensive estimated at $396 billion for 2,457 jets -- has thus far has not been involved in the negotiations.

Jeff Babione, the company's general manager overseeing the F-35 program, said of the talks, "We've provided our LRIP offer to the [Joint Program Office] and we have begun negotiations on the LRIP 11 contract at what will be more than 130 airplanes."

In November, the Pentagon abruptly ended negotiations and forced a "unilateral contact action" worth $6.1 billion for 57 of the stealthy fifth-generation fighters as part of LRIP 9, a deal that disappointed Lockheed officials and was initially supposed to include LRIP 10. (Before that, the last agreement was reached in 2014.)

Lockheed had a chance to appeal the decision by Jan. 31 but opted against doing so. On Tuesday, company officials told Defense News the company will not sue the government over the way the contract was handled.

In February, the Pentagon announced an $8.2 billion deal for 90 new jets in LRIP 10. That pact was noteworthy because it marked the first time the unit price of an Air Force F-35A variant declined below $100 million -- to $95 million per aircraft, Babione said.

F-35A, F-35C Repairs

All the F-35s in need of insulation maintenance are back up and running, Babione said. "We just finished repairing all the planes in the factory," he said. "It's behind us and we're moving forward."

The service in September ordered a temporary stand-down of 13 out of 104 F-35s in the fleet "due to the discovery of peeling and crumbling insulation in avionics cooling lines inside the fuel tanks," according to a statement at the time. Two additional aircraft, belonging to Norway and stationed at Luke Air Force Base, Arizona, were also affected.

Babione said the company is moving quickly to repair the F-35C after it experienced rough acceleration during catapult-assisted takeoffs from Navy carriers -- a hit on the most-expensive variant in the program, which was estimated to take months to fix, according to an Inside Defense report.

Babione said Lockheed and partners recently finished some testing at Naval Air Engineering Station Lakehurst in New Jersey, "trying two different techniques. One was changing the way the pilot straps in -- how they get into the seat, how do they pull their harnesses," he said.

Additionally, he said, "we changed the hold-back fixture … a little less load holding the airplane back when it launches" which reduces the stored energy in the nose gear.

Engineers haven't yet determined whether one of or both techniques will be implemented, Babione said. Testing crews "will want to go back out to the carrier … sometime this fall," he said.

New Facility

Hewson said the company will soon open a new facility in Pennsylvania to sustain F-35 production and boost job growth.

"We are finalizing our plans to expand production for components of the F-35 with a new leased facility in Johnstown," Pennsylvania, a move expected to add 40 jobs by 2018, she said.

The F-35 program will eventually create 15,000 direct jobs and 41,000 indirect jobs across the U.S. over the next few years, Hewson said.

The price of the F-35A variant -- the most popular export version -- has fallen 62 percent since the first batch of aircraft rolled off the production line, she said. The target cost of the aircraft is $85 million or less per plane by 2019, according to the company.

Hewson's comments come weeks after the F-35's program executive officer, Air Force Lt. Gen. Chris Bogdan, told lawmakers the jet's price tag has been steadily falling and could drop to as low as $80 million per plane.

Hewson said the F-35 program is the biggest driver of international growth for the company, with new partnerships and deliveries in 2016 with countries such as Denmark, Israel, Turkey and the Netherlands.

She said about 50 percent "of all F-35 orders over the next five years are expected to come from international buyers."

Babione also said the company is working to contain the cost of sustaining the aircraft -- an expense projected at more than $1 trillion over a 50-year lifetime. He said, "Our commitment, along with our JPO customers, is to try and drive out up to about $1 billion in operational costs by 2022."